Saxo Market Call If new Trump tariffs stick, markets have only just begun to react
Feb 3, 2025
Trump's newly announced tariffs against Canada, Mexico, and China have sparked a modest market reaction that raises questions. The implications for the automotive sector and American brands like Tesla are concerning. Ongoing geopolitical tensions are reshaping energy and commodities markets, while farmers in the U.S. face direct repercussions. Additionally, tariff impacts on cryptocurrency and potential recession risks further complicate the economic landscape. In this climate of uncertainty, all eyes are on how the markets will respond.
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Modest Market Reaction and Energy Sector Impact
- The market reaction to Trump's tariffs appears modest, suggesting some believe he might reconsider.
- The energy sector stands out with a price jump, particularly in natural gas, due to US dependency on Canadian crude.
Asymmetric Trade Impacts and China's Response
- Canada and Mexico, heavily reliant on US exports, face asymmetric impacts from tariffs compared to the US.
- China, while signaling WTO protest and trade talks, aims to avoid currency devaluation and maintain market stability.
Automotive Sector Declines and Brand Boycotts
- Automakers like Volkswagen, BMW, and Mercedes, with significant Mexican production, experienced stock declines after the tariff announcement.
- Public backlash, including boycotts of US brands like Amazon and Tesla, could further impact market performance.